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Trustees should ensure they’re paddling their own canoe

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Trustees should be focusing on pro-active strategies to improve their scheme’s funding position, rather than seeking comfort by judging their own situation relative to that of other schemes or non-fund-specific benchmarks.

Marian Elliott, Head of Trustee Advisory Services at Spence, commented: “We all know that trustees do not have an easy task on their hands, but their focus should always be on improving their scheme’s funding position. “In a recent research report, institutional investors were evenly spread in defining performance against suggestions such as ‘performance against an index of similar funds’, ‘performance against their peers’ and ‘performance against a scheme specific benchmark’. The only things that should matter to trustees when assessing investment performance are how the fund has performed, relative to their particular scheme specific objectives, and the effect that this has had on their funding level.”

Elliott continued: “There is no comfort to be gained by comparing performance with other Schemes or with standard industry benchmarks. When making any investment decisions, trustees should have firmly in mind where it is they want to go and how much risk they can afford to take to get there. This sounds obvious, but we have seen many instances where the goals of the scheme are ill defined and this makes it impossible to adequately assess performance. Trustees need to be taking a much more intrinsic view on their investments and funding level – after all, no-one else can do the paddling for them.”

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